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Huawei and Cisco’s Source Code: Correcting the Record

Last week, I wrote about statements made by Charles Ding, Huawei’s Senior Vice President and Chief Representative in the U.S., Mr. Ding explained the 2003-2004 intellectual property litigation between Cisco and Huawei as follows: “Huawei provided our source code of our products to Cisco for review and the results were that there was not any infringement found and in the end Cisco withdrew the case . . . the source code of the issues was actually from a 3rd party partner that was already available and open on the internet.”

In my blog, I let Huawei and Mr. Ding know that Cisco would waive any confidentiality provisions from that litigation  so the world could learn what really happened and suggested they publish the expert’s report from the litigation.   Huawei and Mr. Ding have so far ignored my offer.  Under the agreement that resolved the litigation, we are entitled to act on our own, so we now do so.

Two things are clear about the Cisco – Huawei dispute:

  • The litigation was between two private companies, not between governments. It’s not about the US or China and we respect the efforts the Chinese government is making to increase intellectual property protection.  Rather, this dispute involved a very simple claim that one company used the other’s trade secrets and copyrighted materials without permission.
  • Unlike the smartphone patent battles, where parties try to protect and grow their market share by suing each other over broad patents where no direct copying is required, let alone even knowledge that a patent exists, this litigation involved allegations by Cisco of direct, verbatim copying of our source code, to say nothing of our command line interface, our help screens, our copyrighted manuals and other elements of our products.

The agreement that ended that lawsuit allows either party to make a reasonable response to improper or impermissible statements by the other.  Mr. Ding’s statements of two weeks ago indeed misstate the facts and therefore merit a direct, factually accurate and proportionate response. Rather than providing Cisco’s interpretation of the facts, we think it better simply to set forth the facts themselves.  To that end, the following are verbatim excerpts from the Neutral Expert’s Final Source Code Report, dated June 15, 2004:

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Cisco Suggests Huawei Release Court Report on Intellectual Property Misuse

Recently,  Mr. Charles Ding, Huawei Corporate Senior Vice President and Chief Representative in the United States spoke publicly about Huawei’s use of Cisco’s intellectual property.

While Huawei’s statements were in a context unrelated to the competitive relationship that Cisco and Huawei have, they nonetheless bear directly on issues that anyone concerned about fair competition in the networking industry ought to be thinking about. Mr. Ding contended that Cisco’s litigation with Huawei in 2003 and 2004 was unjustified. This is the litigation in which Cisco claimed unauthorized use of Cisco’s source code in Huawei products.

Mr. Ding said: “If I remember well, that happened in 2003, when Cisco sued Huawei for intellectual property rights infringement …at that time, Huawei provided our source code of our products to Cisco for review and the results were that there was not any infringement found and in the end Cisco withdrew the case…this is the basic situation of that case.”

When asked, “didn’t Huawei admit that Cisco’s code was in your equipment?”, Mr. Ding stated, “As specifically to the source code, the source code of the issues was actually from a 3rd party partner that was already available and open on the internet.”

In fact, within a few months of filing suit, Cisco obtained a worldwide injunction against sale by Huawei of products including our code for a Cisco-proprietary routing protocol called EIGRP, and Huawei publicly admitted that the code had been used in their products and they pledged to stop.  They even said they had removed that code from the products voluntarily prior to the judge’s action.  After the injunction was issued, Huawei agreed to an expert review of the balance of its code, above and beyond the EIGRP module.  More than a year later, the litigation was indeed concluded.  What happened in the interim, how many reports a court appointed expert released, and what was done as a consequence, were all covered by a confidentiality agreement.

Our legal advisers tell us that given Mr. Ding’s statements, we would be justified in releasing the full report.  To facilitate the understanding about what actually happened in the litigation and allow Huawei to itself clear up any confusion, we waive any confidentiality requirement for the report and suggest that Huawei itself have the expert’s complete final report put into the public domain.   Fair competition, indeed, requires transparency of business practices and a respect for intellectual property rights.

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Why Apple-Samsung Proves that the Patent System Can Work

Like many in the tech industry, I closely followed the recent Apple-Samsung litigation and believe that the case will have meaningful implications for years to come.  What I find most interesting is not the jury’s decision – which could have gone either way for purposes of this commentary – but the underlying premise of this case, which is exactly the type of issue our patent system was designed to handle. I can even picture Thomas Jefferson, our nation’s first Commissioner of Patents, sitting in his study at Monticello, reading about the case on his iPhone and texting a note to Judge Koh congratulating her for her conduct of the case.

This case involved two companies with competing products, and each believed they had intellectual property that should exclude the other from participating within their marketplace. More importantly however, at least some of the patents being litigated were essential to the products’ design. In other words, they were inherently the reason that consumers would want to buy those specific products. This important concept – that true innovation must be tied to consumer preference – played out in a court of law, in front of a jury, and in a way that will have great significance for how the marketplace treats companies that innovate.  Unfortunately, this is a far cry from a majority of patent litigation we see in our system today.

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HP Sues Employees for Leaving – We Challenge HP to Support Employee Freedom

For the third time in two years, HP has filed a lawsuit to stop a former employee from going to work with Cisco – in one case, almost half a year after the employee had left HP in a voluntary reduction-in-force.  As headhunters and other companies are flooded with resumes from HP employees seeking safe ground amidst the chaos of executive turnover, we can probably expect to see more desperate moves to lock up human capital. In an unhappy work environment, it’s a strange decision to try to achieve employee retention by litigation.  And it can’t help recruitment efforts when it seems the corporate slogan could be changed from “HP Invent” to “HP Sue.”

HP has a heritage as a proud California–based company.  Bill Hewlett and Dave Packard built their world-class organization in the one state that won’t generally enforce employee non-compete clauses. In Silicon Valley, human capital is as mobile as financial capital.  Employees’ freedom to find the best way to use their skills and advance their careers is a key factor that has driven the development of Silicon Valley.  Trade secrets are protected by intellectual property laws, not by non-compete agreements and vague theories that a new job would “inevitably” cause an employee to use trade secrets of his or her former employer.   Somehow, Bill Hewlett and Dave Packard didn’t see a need to build a company based on suing people who might want to leave.  As HP has grown in states other than California, however, it’s tried to impose restrictions on employee mobility.

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